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Review By Dilip Davda on June 15, 2024
• The company is engaged in providing Mechanical, Electrical and Plumbing services.
• It has some marquee customers like MIA, L&T, BPCL, HPCL, Reliance Ind. etc.
• It marked inconsistency in its financial performance for the reported periods.
• Based on FY24 annualized earnings, the issue appears exorbitantly priced.
• There is no harm in skipping this risky bet.
ABOUT COMPANY:
Falcon Technoprojects India Ltd. (FTIL) is engaged in the business of providing Mechanical, Electrical and Plumbing ("MEP") services to its PAN India customers which are operating in various sectors including Petroleum Refineries, Residential Townships, Atomic Energy, Civil Construction, etc.
Mechanical, Electrical, and Plumbing ("MEP") services refer to installation services that provide comfortable spaces for building occupants. These services specifically deal with the design, integrating these separate systems into one, the operation can be made more energy effective. The design of MEPs is important for planning, decision-making, accurate documentation, performance and cost estimation, construction, and ultimately the facility's operation and maintenance. MEP services specifically cover the in-depth design and selection of these systems, rather than simply installing the equipment.
Some of its marquee clients include Mumbai International Airport, L&T, BPCL, HPCL, Lodha Developers, Reliance Industries Limited and Shapoorji Pallonji Group. As of January 31, 2024, it had 24 employees on its payroll. It also hires contract labourers as and when needed.
ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden IPO of 1488000 equity shares of Rs. 10 each at a fixed price of Rs. 92 per share to mobilize Rs. 13.69 cr. The issue opens for subscription on June 19, 2024, and will close on June 21, 2024. The minimum application to be made is for 1200 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 27.78% of the post-IPO paid-up capital of the company. The company is spending Rs. 0.62 cr. for this IPO process, and from the net proceeds, it will utilize Rs. 10.27 cr. for working capital, and Rs. 2.80 cr. for general corporate purposes.
The issue is solely lead managed by Kunvarji Finstock Pvt. Ltd., and KFin Technologies Ltd., is the registrar to the issue. Nikunj Stock Brokers Ltd. and Asnani Stock Broker Pvt. Ltd. are the market makers for the company. The IPO is underwritten 85% by Nikunj Stock Brokers and 15% by Kunvarji Finstock.
Having issued initial equity shares at par value, the company issued/converted further equity shares at a price of Rs. 92 per share in September 2023. It has also issued bonus shares in the ratio of 5.7 for 1 in September 2023. The average cost of acquisition of shares by the promoters is Rs. 4.86, and Rs. 13.81 per share.
Post-IPO, company's current paid-up equity capital of Rs. 3.87 cr. will stand enhanced to Rs. 5.36 cr. Based on the upper IPO price band, the company is looking for a market cap of Rs. 49.28 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total revenue/net profit of Rs. 9.46 cr. / Rs. 0.30 cr. (FY21), Rs. 22.90 cr. / Rs. 1.03 cr. (FY22), and Rs. 16.57 cr. / Rs. 1.04 cr. (FY23). For 10M of FY24 ended on January 31, 2024, it earned a net profit of Rs. 0.87 cr. on a total revenue of Rs. 10.37 cr. It marked inconsistency in its top lines for the reported periods and surprised with high margins for FY23.
For the last three fiscals, it has reported an average EPS of Rs. 2.72, and an average RoNW of 34.25%. The issue is priced at a P/BV of 3.96 based on its NAV of Rs. 23.23 as of January 31, 2024, and at a P/BV of 2.17 based on its post-IPO NAV of Rs. 42.33 per share.
If we attribute annualized FY24 earnings to its post-IPO fully diluted paid-up capital, then the asking price is at a P/E of 47.18. Thus the issue appears exorbitantly priced.
For the reported periods, the company has posted PAT margins of 3.13% (FY21), 4.49% (FY22), 6.27% (FY23), 8.39% (10M-FY24), and RoCE margins of 11.42%, 18.03%, 15.24%, 11.54% respectively for the referred periods.
DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy based on its financial performance and future prospects.
COMPARISON WITH LISTED PEERS:
As per the offer document, the company has no listed peers to compare with.
MERCHANT BANKER'S TRACK RECORD:
This is the 1st mandate from Kunvarji Finstock in the ongoing current fiscals, and has no past track record.
Review By Dilip Davda on June 15, 2024
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The initial public offer (IPO) of Falcon Technoprojects India Limited offers an early investment opportunity in Falcon Technoprojects India Limited. A stock market investor can buy Falcon Technoprojects India IPO shares by applying in IPO before Falcon Technoprojects India Limited shares get listed at the stock exchanges. An investor could invest in Falcon Technoprojects India IPO for short term listing gain or a long term.
Read the Falcon Technoprojects India IPO recommendations by the leading analyst and leading stock brokers.
Falcon Technoprojects India IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Falcon Technoprojects India IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Falcon Technoprojects India IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Falcon Technoprojects India IPO.
The Falcon Technoprojects India IPO allotment status will be available on or around June 24, 2024. The allotted shares will be credited in demat account by June 25, 2024. Visit Falcon Technoprojects India IPO allotment status to check.
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